Which of the Following Investments Has the Highest Net Present

question 75

Multiple Choice

Which of the following investments has the highest net present value (NPV) ,given that the interest rate is 5.5%?

• A)one that pays $250 at the end of each of the next four years
• B)one that pays $500 at the end of next year and $500 in four years' time
• C)one that pays $250 at the end of next year and $750 in four years' time
• D)one that pays $200 at the end of next year,$200 at the end of the second year,and $300 at the end of the third and fourth years
• E)one that pays $250 at the beginning of each year for the next four years.

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Definitions:

Joint Product

Products that are generated simultaneously in the same process and cannot be distinguished until a certain point in production.

Scrap Price

The amount of money that can be received for materials or products that are considered waste or unusable in their primary form.

Raw Material

The basic material from which products are made, not yet subjected to any processing or manufacturing.

Material R

A specified type of raw material used in the production of goods, referred to as "Material R" for distinction purposes.